Lords debates local government finance settlement

Lord Smith of Leigh (Labour), vice-president of the Local Government Association, opened the debate, saying: ‘This year's settlement was announced on 19 December but it was no Christmas present for local authorities. It is by far the most complex settlement ever - certainly, in my memory.’

He continued: ‘We cannot simply continue with these slash-and-burn tactics that the government are applying to local authorities. The cumulative, year on year, effect of cuts will and is having serious effects on services. Most of all, and perhaps worst of all, it is not working in what the government want to achieve in cutting the public deficit.’

He went on to propose: ‘There is a better way: the way of public service reform. Most public spending is still coping with the symptoms of problems rather than the cause. If we began a proper, full collaboration of services in an area, as shown by the community budget pilots, we could save - according to estimates verified by Ernst & Young - up to £22 billion over five years.’

Baroness Smith of Basildon (Labour/Cooperative) spoke about the impact of the settlement: ‘We often hear talk of power without responsibility but the way in which this government are treating local authorities is the reverse. This is passing on responsibility without power. Ministers repeatedly state that budget decisions are the responsibility of local councils and that they should decide where the axe will fall. But it is central government... that hands down the budget on which councillors have to balance the books.’

Baroness Hanham (Conservative), the parliamentary under-secretary of state for the Department for Communities and Local Government, spoke on behalf of the government, saying: ‘This is the beginning of a new settlement. It is a fundamental change from the old ways of working. Councils will be expected to make changes, which I appreciate is not always easy. The accusation has been made that this budget or settlement is not fair but I disagree. We think that it is fair. Of course, because of the way in which the formula works, there are differences in certain areas. Northern councils have not come off worse than anyone else. We understand that some areas got less than they anticipated but the north-south split was not part of a formula.’